Frankfurt: European shares on Friday were lifted up by steelmaker ArcelorMittal after Japanese steel shares, banks, and techs that included Nokia and Ericsson rose.
By 02:10pm, the FTSEurofirst 300 index of top European shares was up 0.4% at 805.09 points, having hit a fresh two-month high at 807.83 points earlier.
Banks added most points to the index, with UBS up 3.5% and Deutsche Bank 1.8% higher.
“European markets are taking their cue mainly from Wall Street,” said Michael Koehler, equity strategist at LBBW.
US stocks rallied overnight as reassuring results from bellwethers, including Google, lifted technology shares and JPMorgan’s better-than-expected profit added to banking sector stabilization hopes.
On Friday’s corporate earnings front, eyes will be on first-quarter reports from Citigroup and General Electric, both due for release before the US stock markets open.
“Positive surprises from Citigroup and GE could further fuel the cautious recovery of risk appetite,” Commerzbank said in a note.
Koehler at LBBW said the first-quarter earnings season in the United States had so far surprised positively, especially the banks.
“There are hopes that Citigroup will confirm the trend later today,” he said. “But bank shares already price in quite a lot of positive news so the market impact might not be all that big even if Citigroup delivers better than expected results.”
He added: “GE is important because its broad range of activities makes it a very good business cycle indicator. GE’s outlook will be very closely watched.”
ArcelorMittal, up 3%, was the top non-financial blue-chip gainer in Europe after Japan’s Nippon Steel negotiated a smaller-than-expected price cut with Toyota Motor Corp.
“A price reduction of only 10% comes as a positive surprise. Japanese steel shares have profited,” said DZ Bank analyst Dirk Schlamp.
The DJ STOXX technology index was the top sectoral gainer in Europe with a rise of 2%.
Nokia added 2.2% after rising more than 9% on Thursday as investors cheered the mobile phone maker’s outlook.
Shares in telecoms equipment maker Ericsson, whose SonyEricsson mobile phone joint venture reported a first-quarter loss in line with expectations and said it would slash another 2,000 jobs this year, rose 2.9%.
In addition to the results from Citigroup and GE, investors will also focus on the Reuters/University of Michigan’s US consumer confidence survey for April due at 05:25pm.
“Consumer sentiment in the US could show a mild improvement, as confidence on the equity markets has also risen,” said Helaba analyst Ralf Umlauf.
ING said financial markets had been buoyed by data suggesting that the US economy may contract at a slower rate over coming quarters.
“Improvements in a range of economic releases, including household consumption, new orders figures and housing activity reports, suggest that Q4 2008 will turn out to have recorded the worst GDP growth figure and that numbers are likely to be better, but still negative, through 2009,” ING said in a note.
However, Landesbank Berlin (LBB) warned of volatile and downward trending stock markets in the coming months.
“The (Q1 corporate earnings) reporting season which has just begun should be marked by profit disappointments and a lack of outlooks,” LBB said in a strategy note.
“We regard the explosion in bank shares as exaggerated,” LBB added.
Measured by the DJ STOXX sector index, European bank shares have risen more than 80% since 9 March, outpacing the broader European market’s 25% rise.